Factbook: A Landmark Year for US Energy Evolution

Clean energy, natural gas consumption and energy efficiency rise, as coal burn and CO2 emissions fall and power prices stay flat in watershed 2015, new study finds

WASHINGTON, D.C. – New energy technologies in the US made further critical advances and locked in long-term gains in 2015, according to a new study from Bloomberg New Energy Finance (BNEF) and the Business Council for Sustainable Energy (BCSE). Among other achievements, energy efficiency continued to rise, renewable power generation set new records, and natural gas consumption and production surged as CO2 emissions fell to levels not seen since the 1990s, while power prices remained flat.

These and other trends are chronicled in BNEF and BCSE’s fourth annual Sustainable Energy in America Factbook, a 150-slide almanac of key facts and figures on the evolution of the US energy sector. The Factbook includes an analysis of the year in energy and demonstrates that energy efficiency, natural gas and renewable energy combined to contribute to a dramatic shift in generation and consumption of energy in the US over the past year.

As the BNEF team declares in the Factbook’s Executive Summary, “The already rapid decarbonization of the US power sector accelerated with record numbers of coal plant closures and solar photovoltaic system commissionings, while natural gas production and consumption hit an all-time high. Concurrently, the US continued to enjoy greater benefits from energy efficiency efforts as economic growth outpaced the growth in electricity consumption.”

“2015 clearly marked a turning point for American energy,” declared Lisa Jacobson, President of the Business Council for Sustainable Energy. “As we consider the post-Paris world, we should acknowledge that we’ve entered a new era here in the United States. We now have both the tools and the capacity to achieve carbon reductions and cost savings along with economic growth. Now our job is to continue to build on the progress we’ve made.”

The 2016 edition of the Factbook outlines key metrics in the combined contributions of energy efficiency, natural gas and renewables in 2015:

• Investment in energy efficiency continues to pay dividends for the US economy. American energy productivity increased by 13% from 2007 to 2015.

• 2015 was a record year for natural gas production, consumption, flows to power generation and volumes into storage – demonstrating a robust and flexible system that is serving more customers than ever.

• Renewable energy is a prominent part (20%) of the US 2015 power fleet, with 222GW of installed capacity across the country, a 57% increase over 2008 levels, resulting in a diverse electricity portfolio that is reliable and reduces emissions and costs.

As Colleen Regan, Senior Analyst at BNEF explained, “Last year was certainly one for the history books: US power sector CO2 emissions fell to their lowest annual level since the mid-1990s. And the net impact on consumers is negligible to positive as prices for electricity and fuel remained low by historic standards and customer choices expanded. Perhaps most importantly, many of the key changes seen in 2015 are likely permanent shifts, rather than temporary adjustments due to one-time events.”

The 2016 edition of the Factbook is now in a convenient PowerPoint format intended to serve as a reference guide for sustainable energy statistics, information and analysis year-round. It can be downloaded from the BCSE website: http://www.bcse.org/sustainableenergyfactbook.html.

Further evidence of the dramatic impact of sustainable energy contributions in 2015 is included in the Factbook’s key observations related to the triple play of carbon emission reductions, cost savings and economic growth observed in the United States in 2015.


Energy Productivity Grew

• Energy productivity – the ratio of US GDP to energy consumed – continues to grow, improving by 2.3% from 2014 to 2015 following a 1.1% increase the previous year. US GDP has grown by 10% since 2007, while primary energy consumption has fallen by 2.4% over the same period.

• Within the electricity sector specifically, this ‘decoupling’ – a disconnection between energy consumption and economic growth – is even more visible: electric load growth in 2015 clocked in at only 0.5%, compared to a projected 2.4% increase in GDP.

• And since 2007, electricity demand has been flat, compared to an annual growth rate of 2.4% from 1990 to 2000.

Low US Power Prices Can Improve Economic Competitiveness and the US Continued to Attract Clean Energy Investment

• The continued low cost of power allows the US to potentially out-compete a number of other countries on electricity charges for businesses, with average industrial retail rates in the US (7.1¢/kWh in 2014) far below those of Germany (15.9¢/kWh), China (14.3¢/kWh) and even India (10.7¢/kWh).

• Globally, the US held its place as the second-most attractive country for clean energy investment – but it remains far behind China, which received $111 billion worth of capital flows into the sector compared to the US’ $56 billion. Other APAC countries brought in $58 billion, while investment in Europe fell off dramatically to $59 billion from $72 billion in 2014.

Energy Efficiency Pays Dividends

• Natural gas and electric utility spending on efficiency reached $6.7 billion in 2014 (the latest date for which full year data is available), up 8.1% from $6.2 billion in 2013.

• Energy Savings Performance Contracting (ESPC) investment topped $6.4 billion in 2014. And electricity savings from energy efficiency programs also continued to climb year-on-year, topping 25GWh in 2015.

• The Energy Star program – a leading energy efficiency marker – now certifies 4 billion square feet of non-residential floor space in the United States, up from just over half a billion square feet in 2006.

• Finally, new combined heat and power build was up 25% in 2014 (the latest year for which numbers are available) due to greater industrial demand.


Carbon Emissions Fell

• The changes that took place in the past decade through 2015 resulted in the lowest yearly carbon emissions produced by the US power sector since 1995.

• At 1,985Mt, the 2015 power-sector carbon emissions figure was 4.3% below 2014 levels and 17.8% below 2005 levels, the benchmark against which the Environmental Protection Agency’s Clean Power Plan set a goal of a 32% emissions reduction by 2030.

Coal Generation Decreased

• Challenging economics and the shadow of environmental regulations encouraged the accelerated retirement of 14GW of coal-fired power plants in 2015, representing 5% of the installed coal capacity in the country. Since 2005, the US has permanently closed more than 40GW of coal-burning power plants, while adding only 19GW of new coal to the grid.

• Due to both these retirements and competition from low-priced natural gas, coal provided only 34% of US electricity generation in 2015, down from 39% in 2014 and from 50% at its peak in 2005.

Renewables Boosted Cleaner Energy Generation

• An estimated 8.5GW of wind and 7.3GW of solar photovoltaic (PV) were installed in 2015. The 8.5GW of wind build was 65% above 2014 levels, as developers rushed to complete construction ahead of the anticipated end-2016 expiration date of the Production Tax Credit. 2015 will fall just shy of 2012’s record 18.2GW of new, renewable capacity, but PV additions across both small- and utility-scale sectors will set new records as 2.9GW and 4.4GW, respectively, connect to the grid. This is a 13% increase from 2014 build.

• New hydro build hit 306MW (+115% from 2014) and geothermal added 61MW of new capacity (+33%). Biomass, biogas and waste-to-energy together added 224MW, up 15% from the year before.

• Clean, renewable sources of power now make up 20% of the US plant stack, at 222GW. Hydroelectric facilities and pumped storage represent nearly half of this at 102GW – a figure that has stayed roughly constant since 2008. Wind is the second-most prevalent renewable technology, standing at just under 75GW at the end of 2015, roughly triple its installed capacity at the end of 2008 (25GW). But solar has been the fastest growing, averaging a 60% clip annually since 2008 to bring its total capacity to 28GW.

• Geothermal, biomass, biogas and waste-to-energy additions have grown at a slower pace, with 3.2GW added collectively since 2008. Capacity for biomass, biogas and waste to energy reached a total of 13.5GW in 2015, 15% above 2008. Geothermal installations have also risen 15% since 2008, to finish 2015 at 3.6GW.


Natural Gas Costs Dropped

• As natural gas prices sank to their lowest levels since 1999 and natural gas plants displaced generation previously provided by retiring coal plants, natural gas consumption in the power sector exceeded 10quads for the first time ever, surpassing 2012’s high-water mark of 9.8quads.

• Natural gas is now within striking distance of being the largest source of US power, producing over 32% of US generation in 2015, compared to 34% for coal.

Retail Power Prices Held Steady

• Importantly, surging renewables build and coal retirements have not triggered a dramatic leap in retail power prices. Average US retail electricity rates remain 5.8% below the recent peak (2008) in real terms, in part due to cheap generation from natural gas. Year on year, retail rates in 2015 fell 1.3% in real terms, even as real GDP grew by 2.4%.

Renewables Generation Costs Decreased While New Builds Increased

• Generation costs associated with renewables have also been dropping. In windy parts of the country like Texas and the Midwest, wind developers have signed long-term power purchase agreements (PPAs) in the range of $19-35/MWh, undercutting both on-peak and off-peak power prices as well as other sources of generation.

• Also in Texas, utility-scale solar plants have achieved PPAs at rates close to $50/MWh, and in regions with either high retail electricity rates or high solar PV capacity factors distributed solar can be an economically competitive option for homeowners.

• New build in solar (7.3GW) and wind (8.5GW) outpaced even that of natural gas (6.0GW). Wind in particular marked a 65% increase in build from the previous year.

• Geothermal, hydro, biomass, biogas and waste-to-energy saw 0.6GW of build. New capacity additions in 2015 for geothermal, biomass, biogas and waste-to-energy jumped one-third from the previous year, while the rate of hydro installation soared 115% during the same period.

Infrastructure and Technology Investments Rose

• Gas utility construction expenditures for distribution infrastructure rose to $9.7 billion in 2014, compared to an average of about $5 billion per year during the 2000s, reflecting, in part, the increased prevalence of natural gas replacement and expansion programs across the US.

• Investment in zero-carbon energy and enabling technologies maintains its momentum:

o Since 2007, the US has poured $445 billion into renewable energy and energy smart technologies, which enable the integration of variable sources of power generation into the grid. Annual totals range from $36 billion to $64 billion; investment in 2015 hit $56 billion, up 8% from the year before. Roughly half of all new investment was directed towards solar, and 21% towards wind.

The 2016 Factbook also examines the impact of the dramatic policy changes over the past year, including the release of the Clean Power Plan, the Paris Agreement, Congressional passage of tax legislation that extended important tax incentives and state initiatives such as Net Energy Metering and Renewable Portfolio Standard programs. It also contains extensive analysis, charts and data on a wide range of sustainable energy trends in 2015, including energy storage, oil, electric vehicles and transportation, distributed energy, combined heat and power (CHP), fuel cells, carbon capture and storage (CCS), and natural gas infrastructure investment.

About the Factbook Partners

Bloomberg New Energy Finance (BNEF) provides unique analysis, tools and data for decision makers driving change in the energy system. With unrivalled depth and breadth, BNEF helps clients stay on top of developments across the energy spectrum from our comprehensive web- based platform. BNEF has 200 staff based in London, New York, Beijing, Cape Town, Hong Kong, Munich, New Delhi, San Francisco, São Paulo, Singapore, Sydney, Tokyo, Washington D.C., and Zurich.

Business Council for Sustainable Energy (BCSE) is a coalition of companies and trade associations from the energy efficiency, natural gas and renewable energy sectors. The Council membership also includes independent electric power producers, investor-owned utilities, public power, commercial end-users and project developers and service providers for energy and environmental markets. Since 1992, the Council has been a leading industry voice advocating for policies at the state, national and international levels that increase the use of commercially-available clean energy technologies, products and services.

The Sustainable Energy in America Factbook was commissioned by the Business Council for Sustainable Energy and supported by the generous contributions of the following BCSE members: American Gas Association, Covanta Energy, First Solar, Ingersoll Rand, Johnson Controls, Kingspan Insulated Panels, National Hydropower Association, Polyisocyanurate Insulation Manufacturers Association, Sempra Energy and Solar Energy Industries Association.

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
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